What Facebook Owes to Journalism

Facebook chief executive Mark Zuckerberg’s manifesto about community, released last week on Facebook, wisely analyzed the state of journalism: He decried sensationalism, and declared that “a strong news industry is also critical to building an informed community.” Giving people a voice, he said, “is not enough without having people dedicated to uncovering new information and analyzing it.” He even noted that “reading local news is directly correlated with local civic engagement.”

Unfortunately, his memo ignored two major points — the role that Facebook and other technology platforms are playing in inadvertently damaging local news media, and the one way they could actually save journalism: with a massive philanthropic commitment.

Local news is weak in large part because the business models have collapsed. The main reason: As advertising spending shifted from print, TV and radio to the internet, the money didn’t mostly go to digital news organizations. Increasingly, it goes to Facebook and Google.

Of the $59 billion spent on all digital advertising in 2015 — across millions of web sites, by millions of advertisers — $36 billion went to those two companies. And their share is rising: Most of the increase in digital advertising in 2016 went to them. One analyst estimated that while Facebook and Google surged, the category called “everyone else” actually declined.

Because their ad-targeting abilities are so effective, their power with local businesses will only grow. About 25 percent of Facebook’s digital advertising income comes from local businesses, according Borrell Associates, a leading media analyst.

To be clear, Facebook and Google are not being malicious. This isn’t like the tobacco industry knowingly trying to addict people to a product that kills them. Quite the contrary; these companies are sucking in the lion’s share of digital advertising because the ad products they offer are so damn good. They are saving local businesses massive amounts of money.

But just because the result is unintentional doesn’t mean it is fantasy: Newsrooms have been decimated, with basic accountability reporting slashed as a result.

A quick word about two other big players, Verizon and Apple. If Verizon, which owns AOL, succeeds in buying Yahoo, the combined company would become the third biggest recipient of digital advertising dollars, earning about 10 percent.

Apple’s impact is more indirect. Its promotion of ad blocking technology will further erode the income of news organizations. And the rise of mobile news consumption fueled by smartphones has mostly ended up hurting local news organizations by facilitating the rise of social media as the main distribution platform for news.

I’m not saying that the good stuff — the mobile revolution, blocking intrusive ads, better marketing options for small businesses — doesn’t outweigh the bad. And local news organizations absolutely contributed to the problem with their sluggish and often uncreative reaction to the digital revolution. But we still need to accept that “disruption” does disrupt, and occasionally some of what gets overturned is extremely important. When that happens — and if adequate market-based solutions haven’t materialized — philanthropy must step in, too.

In the last ten years or so, there has been a bit of an increase in philanthropic support for journalism. But if you look closely, a few things stand out.

First, the amounts are tiny. Foundations donated $13.4 million to investigative journalism in 2015 and 2016, according to Media Impact Funders, an organization that tracks philanthropic spending on media. By contrast, newspaper revenue is at least $1.6 billion less per year than it was in the 1980s.

The next thing you notice is the four names that are missing from the list of 89 foundations that contributed during those two years: the foundations connected to Facebook, Google, Verizon and Apple. The Tulsa Community Foundation donated more to help investigative journalism than those four combined.

If we go back further in time, the pattern persists: $145 million was donated for investigative journalism by 374 foundations from 2009 to 2016. There was one from the big four — $10,000 in 2011 to the Bronx News Network.

As a reminder, these companies have not exactly been financially struggling. In 2016, the four posted a combined net income of $88 billion ($19.4 for Google, $10.2 for Facebook, $13 billion for Verizon and $45 billion for Apple). By contrast, the combined net income for The New York Times, Gannett and McClatchy was $41 million.

Individual executives at these companies no doubt have given money to support journalism, and the companies have other significant initiatives to help. Google, which has done the most of the four companies, has established the well-regarded Google News Labs to provide outstanding “tools, data and programs” to help journalism and the “Digital News Initiative” that’s spent more than $40 million on new media in Europe.

Facebook recently announced the “Facebook Journalism Project” pledging to work with media on “new storytelling formats” and stating that “we’re interested in exploring what we can build together with our partners to support local news.” These are genuinely positive steps that may indicate a growing recognition that they need to be a big part of the solution.

But while training, technology and innovation are critical, what journalism needs most now is money, and lots of it — to fund full-time local journalists. What these companies have donated so far is too little given how wealthy they are, how much harm they’re (inadvertently) doing — and how much good they could do.

The 19th century robber baron Andrew Carnegie gave away most of his wealth later in life. “Surplus wealth is a sacred trust which its possessor is bound to administer in his lifetime for the good of the community,” he said. Carnegie built almost 3,000 libraries. All Mark Zuckerberg, Larry Page, Sergey Brin and Laurene Powell (widow of Steve Jobs) have to do is fund 3,000 journalists.

If the leaders of these companies put the equivalent of just 1 percent of their profits, for five years, to the cause, local American journalism would be transformed for the next century.

That would be $4.4 billion — enough to establish a permanent endowment to fund local journalism. That would produce about $200 million in income a year, more than 15 times the current philanthropic spending on investigative journalism — and enough for about 50 new investigative reporters in each state, or to underwrite the technology operations of most nonprofit news organizations.

These four companies (plus other digital economy winners) could study Craig Newmark, the founder of Craigslist. In the rise of web 1.0, the classified ads site dramatically undercut newspapers’ classified revenues. Newmark defended Craigslist but also acknowledged that, whatever the cause, the fate of journalism is important to American democracy. So he’s given millions of his personal wealth to fund journalism projects.

There’s no doubt that the digital revolution — built in no small part by these four companies — has made reporting much easier for the journalists still remaining in local newsrooms. But we urgently need far more of those journalists.

These companies are among the biggest beneficiaries of the digital disruption that has, among other things, caused the crisis in American journalism. It’s time for the disrupters to solve these problems. They have the money, the know-how and the obligation.

Correction:Feb. 21, 2017

An earlier version of this article misspelled the first name of a Google co-founder. It is Sergey Brin, not Sergie.

Steven Waldman, the founder of LifePosts.com, was the prime author of the Federal Communications Report “Information Needs of Communities: The Changing Media Landscape in a Broadband Age.”